Capital taxes

Inheritance tax (IHT) nil rate band

The inheritance tax nil rate band will increase to £263,000 from 6 April 2004.

Inheritance tax administration

Consultation will take place on simplification of the reporting process for estates where no inheritance tax is payable. The aim will be to limit the need for an IHT account to those estates where there is tax to pay, although there will be a few exceptions. Regulations should be made later this year.

From the date of Royal Assent, the penalty rules for IHT will be amended to bring them more into line with those for income tax and capital gains.

Capital gains tax annual exemption

The annual capital gains tax exemption for individuals will increase to £8,200 from 6 April 2004. The maximum annual exemption for most trusts will rise to £4,100.

Gifts relief

From 10 December 2003, the capital gains tax rules are changed to prevent gifts relief applying to disposals of assets to trusts in which the settlor has an interest.

Private residence relief

From 10 December 2003, the capital gains tax rules are changed to prevent the interaction between private residence relief and gifts relief being used to avoid tax.

Stamp duty land tax - partnership transactions

Stamp duty land tax will apply to the transfer of an interest in land into a partnership, the acquisition of an interest in a partnership (where the partnership includes an interest in land) and the transfer of an interest in land out of a partnership. The change will be effective from the date of Royal Assent.

Stamp duty land tax - technical clarifications

A range of technical changes will remove tax avoidance opportunities and clarify the position on sub-sales. In particular, all variations that extend a lease or increase the rent will be treated as the grant of a new lease. The majority of the measures will take effect from 17 March 2004.